ALL PHOENIX REAL ESTATE

Are you looking for a second or vacation home in the Phoenix real estate market and are you going to need financing? Make sure you’ve got at least 20 percent for the down payment and at least another three percent for closing costs (or be prepared to ask the seller for closing cost help.) Had one of my lenders spending the morning looking for a 10 percent option but none currently exist (these did exist as recently as last December.) …

The above is subject to change. The same lender, Justin “King of the Blue Shirt” McHood, says the rumor mill is abuzz with the possibility of 10-percent products coming back. My own take … if there’s money to be made, one lender or another will find a way to do it. …

I can’t emphasize enough how important it is to talk to a lender before getting too far into looking at homes. This is the second buyer in the last four months who was certain all was set as far as financing went only to discover the down payment was going to be more than they expected. …

Which also means I’ve got to be a lot more strict and specific in the questions I ask. …

One of my out-of-town buyers recently complimented me on the detailed instructions I sent along with the purchase contract he was filling out. Two things help: first, I was a state-certified contract writing instructor when I was back at Century 21. Second, about half of my business comes from out-of-town buyers who often don’t make their decision until they’ve returned home. Better to overexplain than leave questions unanswered. …

We’re on day three of the underwriting saga and I keep coming back to this thought. When all is said and done, all the underwriter rejecting this loan will have accomplished is to keep qualified first-time buyers from purchasing. If my buyers are forced to back out, this very same home will sell and likely for cash. And even if there’s an appraisal contingency, the appraisal has come back at the agreed upon contracted price. This new sale will then be the comp that this same lender and underwriter might later view and not question. It’s just silly. …

True, market value is determined by where buyers and sellers agree but the seller in the case of a trustee’s sale has next to no interest in what the final number might be. There are sales such as this happening every day as investors snap up severely damaged homes, renovate them and put them back on the market at prevailing market rates. Instead of letting this function take place and the market to run its course, an underwriter somewhere who probably never has set foot in a home in Phoenix is deciding the auction sales price is the final word on value, even with contrary evidence staring him in the face, and artificially attempting to undercut the real market value. …

One last note on this underwriting fiasco, at least for today. Here’s the sales price chart for the city of El Mirage as compiled by Altos Research:

The market in this city has been flat for the last two months and virtually flat for the last four. Go directly to the Altos site and look at the 7-day average and market in this city has been flat for six months. SIX MONTHS! Yet this underwriter maintains the market is declining rapidly. Sigh. …

Read your addenda carefully if you’re purchasing a bank owned home. Fannie Mae, for one, starts the 10-day inspection period the day a verbal acceptance is received - not the date the executed contract comes through, as with traditional sales. With a near-one week turnaround on docs, you might find your inspection period’s over before you knew that it had started.

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Here’s the basic scenario:

Buyers find a house. Buyer and seller agree on the price. Appraiser “suggests” a slightly lower price, and buyer and seller agree to agree with the appraiser.

(Cue the ominous music)

Enter the underwriter, who has determined that only he, while pushing pencils wherever his office happens to be, knows this home’s true value. “This home sold for $83,000 at a trustee’s sale six weeks ago,” he says knowingly. “Therefore, it can’t possibly be worth more than that now since no improvements have been made.”

Except improvements have been made. The seller has a stack of receipts but, even more importantly, if you have any experience with foreclosed homes you know the instant you walk in the door that this isn’t the home that was purchased at the trustee’s sale. The smell of fresh paint is a giveaway. The pristine tile through most of the house also might be some sort of a hint. Did we mention there are no telltale holes in the drywall?

The underwriter would notice this himself, if he weren’t pushing pencils at his desk. After all, he’s the only one in this buyer-seller-appraiser-underwriter loop who hasn’t set foot inside of this house. Never has, never will. But he knows the value far better than those that have because he can look up the trustee’s sale on his computer.

Meanwhile, there’s a seller scrambling to turn the receipts into pdfs and buyers who had been less than a week away from moving into their first home now wondering if they’ll be allowed to purchase this home after all.

All because the underwriter knows best, all from the safety of his desk somewhere else in the United States.

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It’s not uncommon when buying in an active adult community to run into a few extra fees - capital preservation fees, HOA transfer fees, disclosure fees are some of the most common. These fees are negotiable but more often than not fall back on the buyer to pay.

But for those buying attached properties - called casitas in areas such as Westbrook Village, there’s an extra layer of fees if, as is likely, the property also is governed by a subassociation. These subassociations are the ones responsible for the smaller outdoor pool in a given area, as well as the landscaping and usually the hazard insurance. For their trouble, they also now are charging transfer and capital preservation fees in many cases.

And none of this even touches the current hijacking scheme some HOAs have started, requiring an upfront fee for the HOA docs that are required by the contract to be sent to the buyer. (Title companies are resorting to taking this out of the buyer’s earnest deposit if there’s no other immediate source for the funds.)

So what’s the lesson in all this? Do it yourself is getting more difficult, and it’s also more important than ever to have an agent who’s familiar with the fee structure in a given community (or at least can find the answers quickly, since the figures are changing almost constantly.)

Without expert help, don’t be surprised when your HUD-1 settlement statement shows some fees you might not have expected.

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Sadly, Devils fans … we’re going to hear this damn song a lot today.

Try and enjoy the weekend anyway.

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City by city numbers are going to have to wait until tomorrow as the actual business of real estate has kept me hopping the last two days.

As for the overall numbers, there are 19,914 single family detached homes for sale in the Phoenix real estate market. The least expensive is, I hope, a typo … otherwise my family will forgo the trip to Applebee’s and write an offer instead.

(Somewhere I guarantee you there’s an unsuspecting buyer who saw this online who now is looking for two twentys.)

And speaking of absolute silliness …

No pictures of the interior of the house - not the kitchen, not the bedrooms, not the bathrooms, not the living or family rooms. But we do have the picture of the ducks at the edge of the lake with the caption “baby ducks do convey.”

How much fun would this lawsuit be? “Ladies and gentlemen of the mediation panel, I only bought this house because my kids love ducks and the listing said ‘baby ducks do convey’.”

(Of course, unless it’s written in the contract the MLS listing isn’t enforceable but at this point we’re splitting hairs … or hares, if baby bunnies also happen to convey.)

Where was I before I interrupted myself?

Oh yes, market stats. We had 6,038 closed sales over the past 30 days which means the Phoenix real estate market has 3.30 months of inventory at the moment.

As I said, details will be forthcoming tomorrow. I’ve got some duck lovers I’ve got to call.

(Photo courtesy of the Arizona Regional MLS)

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